China's economic growth rate is projected at 4.7 percent this year, with economic policies expected to remain prudent and stable, said Citigroup.
The bank pointed out that the mainland economy is showing a K-shaped growth pattern, which may have become entrenched and self-reinforcing, resulting in a significant divergence between macro and micro levels.
The upward slope boosting the stock market and overall economic expansion, while the downward continues to undermine consumer confidence
The bank noted that investors' views on China saw a significant positive shift last year, with positive factors mainly concentrated in the new economy and the supply side, while the traditional economy and domestic demand continued to face challenges.
The bank mentioned that, to break this cycle, strong policy intervention is needed. However, such measures are not expected to occur this year, as the economic policies anticipated to remain prudent and stable this year.
The Chinese government will launch an additional fiscal stimulus of approximately 1 trillion yuan(HK$1.11 trillion), a 20 basis point interest rate cut, and a 50 basis point reserve requirement ratio reduction in 2026, according to the bank's forecast.
The yuan exchange rate to appreciate steadily, projecting the US dollar to yuan exchange rate to remain around 6.8 over the next 6 to 12 months.
